BRITAIN’s big supermarket chains are forcing their suppliers out of business with their “unreasonable” behaviour, according to Grant Thornton, the accountancy firm.

Duncan Swift, head of the food and agribusiness recovery group at Grant Thornton, told The Sunday Times that supermarket suppliers were reporting financial distress at a rate of one a month, and “unreasonable supermarket behaviour” was a contributory factor in more than half of these cases.

Grant Thornton admitted that in most cases supermarkets behave as any reputable business should, but it criticised supermarkets for putting financial pressure on their suppliers through a combination of price demands and failure to give them sufficient notice when ending or changing orders.

Swift said that supermarkets had in some instances dismissed companies as their recognised suppliers with very little notice, triggering job losses and in some cases financial collapse.

In a survey of 50 supermarket food suppliers conducted by the firm, 83% said they expect to see more food suppliers become insolvent in the coming year, with rising costs, price squeezes, and other pressures from supermarkets the key causes.

More than eight out of ten respondents said they believed the supermarkets had too much power. More than two-thirds said they had no written contract, with 23% claiming that supermarkets were unwilling to agree written terms. Almost half had no preagreed order cancellation notice period in place.

Grant Thornton claimed that the suppliers it approached about its survey were fearful of spilling the beans. It approached 1,500 but only 50 responded.

Swift said: “Action is needed and needed now. Supermarket power has gone too far. The Competition Commission is continuing in its enquiries to establish whether there is a competition problem within the sector. But with the current culture of fear I doubt whether it will gather the evidence to prove it.”

Swift added: “Far better to act now and institute hard-hitting change to ensure fair trading and create long-term success.”

The news came as the Association of Convenience Stores (ACS), which represents 33,000 small shops, called on the commission to investigate voucher campaigns by the big supermarkets that target local competition. In the commission’s latest working paper it said that in the absence of complete data on voucher activities, “it is difficult directly to assess this impact”.

The ACS claims that it has given the commission several examples of supermarkets using vouchers to undermine small local competitors. They seek to draw in customers from other shops, often by offering large discounts when a certain amount is spent instore. While this may appear to be good for consumers in the short term, it undermines local shops.

The ACS has commissioned and submitted evidence to the Competition Commission from Professor Paul Dobson of Lough-borough University Business School on the theoretical basis for this type of activity, the extent to which it is used and the effect that it has on consumers.

It cites examples – includinga voucher campaign by Tesco in the East Riding of Yorkshire, to target a Proudfoots convenience store, which has since closed. Tesco denies any wrongdoing.

The ACS insists the commission must investigate further.

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